As the '80s began, two great nations were in the economic doldrums. Inflation was soaring, interest rates were high, and big government was sprawling over everything, taxing away incentives and regulating without limit.
In both countries, the voters turned to new leaders who promised fundamental change. Collectivism is the problem, declared these leaders. What we need, they said, is a rebirth of freedom to liberate the creative, entrepreneurial energies that made our nation great.
Eight years later, the contrasts between the two efforts are striking. Ronald Reagan has changed some things for the better. Inflation has been tamed (down from 12.5 percent in 1980 to only 4 percent this year). Tax rates have been cut—and indexed against inflation. And the economy has enjoyed a period of steady, sustained growth.
Unfortunately, because Reagan utterly failed to curb federal spending, his unprecedented peacetime deficits have led to a tripling of the national debt during his two terms in office—an unconscionable burden to bequeath to the next generation. And Reagan's wishy-washiness on protectionism has cost consumers billions while setting the stage for destructive trade wars in years to come.
Margaret Thatcher began with far more of a basket-case economy than Reagan. Which makes her achievement in eight years all the more remarkable. She, too, has curbed inflation (from 14 percent down to 3 percent), and—though it took a longer period of shakeout—has restored steady economic growth. Indeed, what was once termed "the sick man of Europe" today has the continent's fastest rate of economic growth and highest rate of productivity increase (far higher than ours).
Moreover, because Thatcher has seriously cut back government—selling or giving away numerous state-owned enterprises—Britain's government budget has actually moved into surplus. (Just five years ago British deficits, as a percentage of GNP, were comparable to ours!)
Nor has this budget miracle been achieved on the taxpayers' backs. Under Thatcher the top rate of income tax has been slashed from 83 percent to 40 percent and the basic rate from 33 to 25 percent. Mrs. Thatcher is now promoting further tax reform at the local level.
But what she has done is far more than simply "turn the economy around." Her goal is no less than to restore the principles that made Britain great—individual responsibility and initiative, fairness, entrepreneurship. Or as Fortune recently put it, "establishing a climate in which creation of wealth is not only possible but rewarded."
The key to Thatcher's success is moral vision: a set of long-term goals inspired by basic principles. And the vision is backed up by her strength of character to persevere, step by step, compromising only on details but not on principle.
This long-term approach did not mean tackling everything at once. In her first term, Thatcher went after pressing problems: the nationalized industries, labor union coercion, and the financial markets. Her initial privatizations, labor reform, and deregulations worked, earning her a second term in which to add the stodgy utilities to her privatization/deregulation agenda.
Her achievements are all the more remarkable when we recall just how collectivist Britain had become by the late '70s. In setting out to reverse all that, Thatcher's long-term vision has made for revolutionary changes. She did not simply "sell off" nationalized industries, as previous Tory regimes had done—only to have them renationalized the next time Labour got in. Thatcher deliberately marketed the shares to workers and taxpayers. In just six years, the number of people in Britain who own stock has tripled. Renationalization has become politically infeasible. Likewise, by selling 1.5 million public housing units to their tenants, Thatcher has fostered a social revolution, creating millions of new middle-class property-owners (who, incidentally, no longer vote Labour).
Only now, after earning her third term, has Thatcher begun to take on the bulwarks of the welfare state: the schools, the health service, and the left-wing local governments. And she's as determined as ever to succeed in restoring individual responsibility in those areas.
Meanwhile, back in the land of free enterprise and individualism, this election year presents Americans with two would-be leaders. Michael Dukakis seeks to inspire us with his ability as a "manager." But what kind of society does he aspire to manage? What principles will he go to the wall for? Both his campaign and the Democrats' platform go out of their way to avoid these subjects.
In the other corner stands the Duke's fraternal twin, George Bush. Equally unable to articulate any firm principles or program, Bush just can't seem to get a handle on "this vision thing."
Jesse Jackson did have a vision, but his populist socialism is, fortunately, unacceptable to most Americans. And the Libertarian Party's Ron Paul has a vision—one that reflects our own ideal of free minds and free markets. But he has no chance of being elected.
So we are left with the prospect of a return to the bland, no-brain centrism of the Ford-Carter years. Precisely when this country needs the kind of rebirth of freedom that Ronald Reagan promised—but only Margaret Thatcher delivered.
For it will take more than muddling through to cope with the impending banking crisis, the unending budget deficits, the drug/crime nightmare, and the unavoidable clash between our resources and our military commitments. The next decade requires a president with a moral vision, rooted in the principles of individualism and liberty, and the strength of character to plan and carry out fundamental, long-term reforms.
Margaret Thatcher, we could sure use you.